Strategic Approach Green Products

The concept of sustainability has filtered into mainstream society. It is reflected in both dietary and consumption behaviour as well as in the selection of holiday destinations: Recent surveys show that almost one in four buys organic products frequently or exclusively (German Ministry of Food and Agriculture, Environmental Barometer 2020), whilst one in three today already takes sustainability aspects into consideration when travelling (Bavarian Centre for Tourism - BZT, Travel Analysis 2021). In other words, an increasing number of people are interested in the social and environmental impact of their actions. However, the following still applies: Sustainability is never the only decision criterion. Quality and price are just as important. At the same time, consumers associate various facets with the term sustainability. For some people it is about protecting the climate or resources, whilst others attach importance to social conditions or animal welfare.

The REWE Group wants to take these needs into account and also get more and more people enthusiastic about more sustainable products and services. While doing so, the REWE Group seeks to make sustainability part of its business strategy, contributing to economic success and forming an important driver of growth.

The sales lines of the REWE Group distribute both private label products and products of third-party brands. The commercial company holds regular discussions with brand producers and promotes exchanges with experts about sustainability, within the framework of industry initiatives, for example, or in joint projects. This dialogue and cooperation are important to promote the subject of sustainability. But the REWE Group has a lot of influence with its private label products and, consequently, a particular responsibility. This is why this aspect is the focus of its sustainability commitment.

Principles

As a leading international trade and tourism company, the REWE Group is keenly aware of the special role it plays as an interface among producers, suppliers and consumers. The production of REWE Group private label products has impacts on humans, animals and the environment. Customers of the REWE Group assume – and should be able to trust – that the commercial company is aware of its responsibility in the supply chains of its private labels and will deal with the impacts.

The Group is working on offering a larger number of more sustainable product ranges. In the area of food, this includes organic and regional private label products and products for which the REWE Group has achieved improvements in the supply chain. Since 2010, REWE, PENNY and toom Baumarkt DIY stores have been identifying products that are socially and environmentally sustainable and/or that fulfil high animal welfare standards with the PRO PLANET label. The REWE Group wants to encourage sustainable consumption among a broad group of consumers. The 10-year anniversary in 2020 was taken as an occasion to redesign the PRO PLANET label and the awarding process (for more information, see PRO PLANET). In tourism too, an increasing number of more sustainable offers are now available. In 2021, for example, DER Touristik published its first catalogue in magazine form called “Bewusst Reisen” (“Conscious Travel”). It reveals which hotels have sustainability certification and provides information about the travel destinations and the sustainability commitment of hotels (for more information, see Promoting Sustainable Consumption).

In order to meet the complex needs of consumers and permanently integrate sustainability into procurement processes, the REWE Group developed the Green Products Strategy 2030 in 2017, which is based on the core elements of the OECD-FAO Guidance for Responsible Agricultural Supply Chains. It covers the supply chains of its private labels which are sold at REWE, PENNY and toom Baumarkt DIY stores in Germany. The strategy defines the framework to identify and assess the impact of private label products on people, animals and the environment and to take effective measures. The strategy is embedded in the overarching sustainability strategy of the REWE Group and summarises the strategic focus and the operational implementation of sustainability into the pillar Green Products. Its mission – “We act responsibly towards people, animals and the environment” – forms the umbrella of the strategy, on which specific measures are based.

Responsibility

In the 2021 reporting period, the pillar Green Products for the food retail sector in Germany was overseen by Marcel Weber (private label products – national and international). The Sustainable Products area managed by Dirk Heim together with Purchasing and Category Management are responsible for implementing the measures and achieving the goals set in the Green Products 2030 strategy.

Together with Purchasing and Category Management, the identified aspects and focus issues in each area of action are prioritised for each product area within the clearly defined strategy and budget process and backed up with specific measures. Clear goals and responsibilities are also coordinated here. Through the annual strategy and budget process, a regular review of the strategy and measures developed is firmly established. This enables the REWE Group to ensure that any current issues arising from changed general conditions are addressed.

Strategy process

The basis for strategy development was a comprehensive analysis of the sustainability risks and impacts of the REWE Group in the supply chains of private label products. Further important components were the surveying of stakeholders and customers (see Materiality Analysis) as well as political and scientific analyses and objectives (see Sustainable Development Goals). With the aid of a risk and opportunity analysis, environmental, social and business data is evaluated to assess the social and environmental impact of the products and to identify the greatest impacts on sustainability (for more information, see Product-Related Risk Analyses). Building upon this, the impacts that private label products have on humans, animals and the environment were shown quantified in monetary terms.

Amongst other things, the analysis showed that raw material production and the processing of products, in particular, are highly relevant with regard to sustainability criteria. A holistic view of the supply chain is an important element of the sustainability strategy. It is increasingly becoming an integral part of purchasing processes and requires a close exchange with direct and indirect suppliers. The analysis resulted in 25 aspects which the REWE Group has summarised for the operationalisation of the strategy in the following areas of action:

• People
• Animals
• Environment

Furthermore, the REWE Group – with its REWE and PENNY sales lines as competent and reliable partners for a balanced diet – has defined a fourth area of action in the pillar Green Products. This is addressed within a number of different projects:

• Nutrition

Implementation

The strategy is implemented by means of a comprehensive management approach that defines the principles and tools required to carry out the measures:

1. Risk analyses:

The REWE Group continuously evaluates opportunities and risks in the area of sustainability. On the one hand, these analyses are based on external analyses of product areas, specific products and raw material supply chains. On the other hand, assessments and the experience of external NGO expert committees for sustainability and other stakeholders, such as producers, suppliers and employees are included.

2. Derivation of focal points and goals:

Based on the risk analyses, focus raw materials, focus issues, goals and measures were defined, which are adapted and scrutinised when new results or findings are available.

3. Definition and implementation of measures:

Measures to reach goals and process the focus raw materials and focus issues were implemented on three different levels of cooperation:

3.1 Internal cooperation

Through internal training courses and awareness-raising measures, continuous analysis of opportunities and risks and by formulating strategies and goals, the REWE Group integrates sustainable procurement in the purchasing process. The aim is to consider sustainability aspects in supplier and/or product decisions.

3.2 Cooperation within the supply chain

In its cooperation with the companies involved in the supply chain the REWE Group takes a three-step approach, which includes formulating requirements, monitoring and developing the companies. Business partners in the private label supply chains of the REWE Group are obliged to name the production sites in which products for the REWE Group are produced. By raising awareness and obligating the business partners it is possible to create specific rules to implement sustainability in the entire supply chain.

Training helps suppliers and producers implement the requirements of the REWE Group and ensures continuous improvement. In various projects the REWE Group works directly with raw material producers to overcome the challenges. Efforts are also made to integrate transparency and sustainability into the supplier evaluation process. Another important element in the supply chain work is developing effective complaint mechanisms.

3.3 Cooperation with stakeholders

Sustainability in the supply chain can work in the long term only through collaboration with all relevant stakeholders. The REWE Group encourages continuous dialogue with a large number of stakeholders and is involved in various national and international initiatives, alliances and forums.

Important elements include participation in external events, industry initiatives, partnerships, a commitment to continue developing sustainability standards and monitoring relevant developments on political and regulatory levels.

4. Monitoring and reporting:

The activities are reviewed and evaluated. The results of this monitoring work are then incorporated into refining the measures.

The following focus issues were identified within the four areas of action (people, animals, the environment and nutrition), for which specific measures are being taken. They show which aspects within the areas of action have especially high risks and opportunities for the REWE Group and must therefore be handed specifically. For this purpose, goals and KPIs have also been defined and approved for the private labels within the areas of action. The status of goal achievement is checked using the defined KPIs and published in the sustainability report.

People: Living wages and income, forced labour and child labour as well as women in the supply chain

In a globalised world with complex trade relations and a large economic gap between developing and industrialised nations, there is an unequal balance of power. This can lead to societal ills such as forced labour, child labour and poverty-level incomes. Discrimination against women also poses a challenge in global supply chains. The REWE Group is focused on fair working conditions and the protection of human rights in the supply chain.

REWE Group activities relating to ethical business practices are aimed at furthering human rights and improving working conditions in supply chains.

Animals: Husbandry conditions

Conventional intensive animal husbandry in Germany often focuses on the maximum output of the animals. The promotion of rapid growth and weight gain as well as the maximisation of animal density in stall spaces can lead to, amongst other things, stress and altered social behaviour with increased aggressiveness. The animals are also prone to more diseases. For the REWE Group, the respectful treatment of animals in the production of goods of animal origin is fundamental. The company wants to implement greater animal welfare in the supply chains of private labels of animal origin. In this way, a lack of usability or long transport routes should be eliminated and husbandry conditions should be adapted to the needs of the animals – through more space and run-out areas, more activities or through fewer interventions on the animal.

With its measures in the area of animals, the REWE Group is pursuing its ambition of implementing animal welfare in the supply chains of private labels of animal origin.

Goal	Status	Measures
Integration of greater animal welfare in animal supply chains by 2030		See Animal Welfare
In progress Goal attained Goal not attained

Environment: Circular economy, climate and biodiversity

The use of natural resources and the competition for scarce resources such as fresh water, land and raw materials are increasing worldwide. At the same time, this is exacerbating global environmental problems such as climate change, soil degradation and loss of biodiversity. The supply chain of the REWE Group causes environmental effects during the production of products. The commercial company assumes its responsibility and uses various measures to promote the careful use of natural resources along its supply chain. Through these actions, the aim is to sustainably reduce the impact on biodiversity, climate, air, water and soil as well as the impacts of plastic and packaging.

The REWE Group implements measures for the conservation of resources in its supply chains in an effort to protect natural resources and preserve biodiversity.

Nutrition: Varied and healthy diet

The REWE Group is focused on promoting a varied, balanced diet. In addition to its educational campaign on healthy nutrition and exercise, the adaptation of the product range as well as transparent information about the nutritional values of products play significant roles. Following the publication of the strategy paper Sugar, Salt, REWE and PENNY checked and optimised the entire private label range with regard to sugar and salt content between 2018 and 2020. The content was gradually reduced so that customers could slowly get used to the new taste. Alternative sweeteners were not used as a replacement. The plan is to continue optimising private label recipes in the future with regard to their sugar and/or salt content. Since 2020, this has been taking place as part of the introduction of the Nutri-Score – the additional nutritional information labelling. This is designed to help consumers make conscious food choices. For information about the Nutri-Score, see Nutrition.

With the “ErnährWert” value, REWE is offering consumers additional guidance for a balance diet. This is shown in many of the online recipes in REWE Deine Küche (REWE Your Kitchen) and provides information about the nutrients contained and the balance of the dish. In addition, the nutrition encyclopaedia in REWE Deine Küche offers information about ingredients and additives, fats and oils, seasonal and conscious nutrition, food intolerances and the Nutri-Score.

With its measures in the area of nutrition, the REWE Group encourages people to have a varied and balanced diet.

The following sections of the GRI Report contain all measures, data and topics related to the pillar Green Products:

• Biodiversity
• Organic
• Living Wages and Income
• Raw Materials in Focus – Food
• Raw Materials in Focus – Non-food
• Women in the Supply Chain
• Nutrition
• Child Labour and Forced Labour
• Climate Protection in the Supply Chain
• Customer Health and Product Safety
• Promoting Sustainable Consumption
• Environmental Aspects in the Supply Chain
• PRO PLANET
• Product-related Risk Analyses
• Regionality
• Social Aspects in the Supply Chain
• Animal Welfare
• Packaging
• Circular Economy
• Water